In the Wirecard scandal, the state regulator wants to bar the auditing firm EY from major new contracts for two years.

Due to breaches of duty when auditing the collapsed payment service provider's annual reports, EY Germany will temporarily not be allowed to take on any new mandates from listed companies, credit institutions and insurers, according to a statement from the Auditor Oversight Authority (Apas) on Monday. Fines have also been imposed on the company and several auditors. The decisions are not legally binding.

Wirecard collapsed in June 2020 when it became known that 1.9 billion euros were missing from its cash register. EY had approved the balance sheets of the then DAX-listed company from Aschheim near Munich for years. EY Germany explained that it had been informed by Apas that it had concluded its investigation. As soon as the regulator has officially communicated the details of its decisions to the company, EY will examine them carefully. EY has cooperated fully with Apas throughout the investigation and has learned lessons from the case. Comprehensive measures have been taken to strengthen audit quality and risk management.

Apas, which is based at the Federal Office of Economics and Export Control (BAFA), said it audited the work of the auditors on the financial statements of Wirecard AG and Wirecard Bank AG in the years 2016 to 2018. The supervisory authority considers it proven that the auditing company and several of its employees violated their professional duties.

The supervisory authority imposed a fine of 500,000 euros on EY in addition to the suspension. This is the maximum amount applicable under the law at the time. Five auditors are to pay fines of between 23,000 and 300,000 euros. The proceedings against seven other auditors were dropped because they have returned their professional licenses and can therefore no longer be prosecuted by Apas according to the law.

According to Apas, the auditors' existing mandates are not affected. Those affected can lodge an appeal against the decision with Apas and, if an appeal is rejected, take legal action. Apas emphasized that these are exclusively consequences of professional supervision, which are not binding for other proceedings.

The Wirecard scandal has triggered a whole series of claims for damages and criminal proceedings. For example, EY is facing claims for damages, which the company has rejected. Three former Wirecard managers have been charged with accounting fraud, market manipulation, breach of trust and gang fraud at the Munich Regional Court.

(Report by Jörn Poltz, edited by Ralf Banser. If you have any queries, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and the economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).)